tv Nightly Business Report PBS June 8, 2012 6:30pm-7:00pm PDT
>> this is n.b.r. >> tom: good evening. i'm tom hudson. susie is off tonight. spain could ask for a bank bailout as soon as this weekend. in the u.s., president obama calls on congress to pass his jobs plan. we will look at the president's scorecard on job creation. and does america's failing financial literacy hurt the economy? that and more tonight on "n.b.r." >> reporter: i'm erika miller in new york. all around the globe, investors will be paying close attention this weekend to see if spain requests billions to bailout its banks. many spanish banks are in trouble because of bad real estate loans. the country's unemployment rate is nearly 25%, making it increasingly difficult for many spaniards to pay their mortgages. if spain needs help, it would mark a new low in the european
financial crisis. although greece, ireland and portugal have already received bailouts, spain's economy is much bigger. >> spain's debt is essentially bigger than all of the other three combined. and the other issue with spain, also, because of its size-- if a country as big as spain gets bailed out, then the question is who is next? >> reporter: there's no way of knowing how much spain could ask for in aid. but fitch says the cost of shoring up spanish banks could hit $125 billion-- 9% of g.d.p. today in washington, president obama urged european leaders to act quickly. >> the sooner that they act and the more decisive and concrete their actions the sooner people and markets will regain some confidence. >> reporter: the goal, of course, is to keep europe's debt crisis from spreading hurting the global economy. >> if europe slows down and buys less from china, then china will slow down. if china slows down, they have less euros and dollars to invest, maybe they buy less u.s. treasuries. >> reporter: spain is under
strong pressure from the united states and other countries to have a solution in place before june 17. that's when greece will hold parliamentary elections and it could determine whether the country stays in the eurozone. erika miller, n.b.r., new york. >> tom: still ahead, a bullish outlook on u.s. stocks in spite of all the trouble brewing in europe. that's the forecast from tonight's market monitor hank smith. "nightly business report" is brought to you by: captioning sponsored by wpbt >> tom: hopes over a spanish bank bailout helped stocks finish the day higher. the dow gained 93.
u.s. sales to euro-zone countries fell almost 10%. european imports to the u.s. for the week, the dow is up the nasdaq gained 4% the s&p 500 up 3.7%. while stocks shook off the european worries this week, one place we can see the impact of europe is in u.s. trade numbers. the trade deficit narrowed in april, thanks to less trading with europe. u.s. sales to euro-zone countries fell almost 10%. european imports to the u.s. dropped by more than 11%. >> tom: the drop in business with europe comes as u.s. goods
and services have gotten more expensive thanks to a drop in the euro against the dollar. last year, one euro cost $1.45. today it's $1.26. suzanne pratt reports the dollar's gain could spell trouble for corporate america. >> reporter: unless you've traveled overseas, you might not have noticed what's happened to the dollar. it turns out it's getting mightier. in the last year, the u.s. dollar has gained about 15% against europe's common currency: the euro. in general, a country's currency strengthens as a result of an improving economy. currency experts say what's happening today, however, is more about the weakness of other countries. >> we're growing. we could be growing faster, of course. i'm sure president obama would like it a little faster rate of growth. the fact of the matter is we're growing while the eurozone is in recession. and, that really stands out. even though the u.s. has subpar growth, it's still better than what we have in europe. and, i'd rather be here than there at this point. >> reporter: the significance of a stronger dollar goes well
beyond travel and what happens on currency trading floors like this one. for multinationals that do big business overseas, it can subtract millions of dollars from their profits. what happens is that european consumers buy fewer american products, because they cost more. on top of that, multinationals convert their overseas earnings into dollars. and, the stronger the dollar, the weaker the sales. earnings experts say some large companies have already shared the bad news with investors. >> in general, the consumers staples and healthcare sector are the two with the most negative pre-announcement data. the two companies that stand out the most are procter and gamble and merck. >> reporter: the concern is that there will be more big companies with currency losses, especially if the greenback continues to gain ground. and, that's just what's expected. >> we have a q-3 and end of q-3 target of 120 and after that even a sub 120 level.
so, it's pretty much wide open, a lot of it depends on how european policy makers respond. >> reporter: considering how european policymakers have responded so far, it's likely we'll be talking about the effects of a stronger dollar for many months. suzanne pratt, "n.b.r.", new york. >> tom: a stronger dollar has contributed to a drop in commodity prices like oil, as has a drop in demand from places like china, which has been a huge consumer of global commodities. we spoke with dambisa moyo. we started with a stronger dollar threatening china's economy. >> obviously factors driving the >> obviously factors drivingw:ry and especially where the trade and the exchange rate are concerned but i think more fundamentally the story of what china needs to do for china. they faced major heaheadwinds w a population of at least a billion people that live
impoverished lives. the focus is less about what the u.s. is doing and what china needs do stave off economic downturn. >> and china cut interest rates trying to simulate double-digit gdp growth and we didn't see an increase in comedy prices. china lowering the cost of cash and didn't see it this time, why? >> fundamentally the story still holds there's far too much demand outstripping supply and in the most bearish scenario where people think china's going to grow 7.5% and you have energy and minerals broke at 5 and i know people are negative and worried with the electricity numbers and industrial production numbers out of china, issues around railway usage and bank loans but i think the
fundamental story holds. >> one of the points you make in the book winner take all is china's the only country that understands the risk the coming commodity crisis. . is the u.s. simply in the dark regarding this? > china has a multilateral approach solving the issue where the united states one would argue and a do argue has adopted a unilateral approach which is very much focussed on military encouragement and attacks such that's ones we've seen in iraq. >> but we have seen u.s. oil production hit the highest point since the 1990s. domestic production has sky rocketed. >> absolutely by my comments pertain to how the united states interacts with other coutries around the commodity question. china has befriended the axis of the unloved.
coutries and regions like africa, brazil and other countries heavily resource endowed and in the long term should be beneficial. >> very good read. the book, "winner take all." >> tom: republican challenger mitt romney is calling the president out of touch after mr. obama told reporters today, quote, "the private sector is doing fine," end quote. later, the president revised his remarks to say the private sector is getting better.
we're spending this week looking at the election, jobs and the economy. last night, it was mitt romney's record. tonight, darren gersh looks at the president's record on job creation. >> reporter: for the last 27 months, the president points out, the economy has been creating jobs. 4.3 million of them. >> job growth in this recovery has been stronger than in the one following the last recession a decade ago. but the hole we have to fill is much deeper and the global after shocks are much greater. >> reporter: but that 4.3 million figure measures private sector job growth from the bottom of the recession. the white house is leaving out of its calculation half a million government workers who lost their jobs over that same period. measure total job growth from the beginning of the president's term and you get a slim gain of 172,000 jobs. any way you slice the numbers, critics say the president is trying to make his record on jobs look better than it is. >> trade policy, there's be basically no activity. regulatory policy, tax uncertainty. so i don't think they've made a
concerted effort to be hostile to job creation, it's just always been the second priority. >> reporter: supporters say the president's policies may not have filled the jobs hole left by the great recession, but they helped a lot. >> i don't know that there is any set of policies or keynesian interventions that would have repaired all of the very deep damage from the deepest recession since the great depression, but i do know that the policies helped reverse those trends sooner than would otherwise have been the case and began building back a jobs record. >> reporter: all of which sets up a key debate in this election. the president says a million more jobs would have been created if congress passed his jobs plan. republicans fire back the president is doubling down on policies that have already failed. darren gersh, "n.b.r.", washington. >> this election likely will turn on the economy at a time when many americans especially young americans struggle with how much they know about money and finances. robert moreette invested $160
million in a national literacy effort. the mixture of financial literacy and politics how do you think it impacts our economy? >> i think the financial literacy issue is a long-term issue. at the end people are educated to being entrepreneurs and grow a business and second they need an aspiration in terms of hope and promise. so we're trying to bring both together in this initiative at pwc which we call earn your future. >> the fact is you've identified financial literacy as an issue you want to concentrate on. does if have an impact on financial policies at the federal or state level that many americans don't deem themselves as financially literate? >> i think it does. at the end of the day when you look at the individual mindset and confidence level in
understanding what they can do buying a car or credit cards whatever the case is may be has reach impact on the buying decision and over the long term we're trying to educate people to be future business leaders, politicians, regulators, whatever the indication may be to have a sustainable feature. >> maybe a future chairman of a global giant like you are i have to ask you why your view of the global economy is and how do you see europe for your clients? >> europe is troubling right now. unfortunately europe has a bigger hangover affect arm the world. i use a couple key words. in the u.s. we've had ceos and businesses resilient but the overhang is putting a dampening effect. the second thing is variablity.
>> where you seeing the strongest area of business especially when it comes to possible future hiring? >> we'll we've done a survey the strongest hiring was around the area of technology, health care services, professional services and communication. those were the big industry trends where they'll be hiring on a global basis looking ahead. that's probably waned because of the overhang but that's what ceos were telling us. >> a little financial literacy with robert morett chairman of pwc.
>> tom: after a morning sell- off, we saw steady buying into today's closing bell. the low of the day was hit in the first 20 minutes of the session with the s&p 500 slowly climbing from there. the index was able to end close to its highest price of the day, helping make this the best week for the index this year. volume was very light, 686 million on the big board. 1.4 billion shares on the nasdaq. the telecommunications sector rang up the biggest gains of the day, stronger by 1.5%. the financial sector rebounded 1.2%. and technology gained almost 1%. leading the telecom space was sprint nextel. the stock and the company have been struggling against larger competitors a.t.&t. and verizon. today, shares jumped almost 9%, ending a week with the stock up almost 20%. tonight's close matches its
march high. it hasn't closed above $3 per share since october. it announced a pre-paid plan for the iphone this week, competing against subscriber contracts with other carriers. while we're talking about the mobile phone business, finnish company nokia saw heavy trading volume of its u.s. listed shares. the stock closed up 6.7%. the company has been the focus of merger rumors as it has struggled to keep up in the smart-phone market. in banking stocks, citi was the big percentage gainer, up 3.2%. that takes the stock to a three week high. after the close tonight, the bank said it will submit a new plan to the federal reserve on monday, showing its financial cushion, but it does not include a stock buy-back this year. that part of an earlier plan was rejected by the fed. wal-mart got some good news today. a federal judge cast doubt on a gender discrimination case against the company. the women claim wal-mart discriminated against this by denying them raises and promotions. an earlier class action case was thrown out and this new effort focuses the claims in california. but the judge said the case can
move forward only if the women show new evidence. the stock was the biggest percentage gainer among dow jones industrial stocks up 3.6%. volume was heavier than usual with w.m.t. at its highest price since late 1999. dragging on the dow was mcdonald's. shares fell 0.7% after reporting global sales at restaurants open for at least a year were slower than expected. this biggest disappointment came from mcdonald's asia and mid- east restaurants, where sales actually fell. in our exchange traded fund market flash, the only losing fund among the most actively traded was the emerging market fund down 0.9%. and that's tonight's market focus.
>> tom: investors may be on edge, but stocks could be poised for a big rally if the european debt threat stabilizes. that's the outlook from tonight's market monitor. hank smith is chief investment officer of haverford trust, managing $6.5 billion. >> that's a big if heading into the greek elections. >> what we got this week was a preview of what could happen if we get market credible action putting a firewall the banks and deposit insurance and i think that's going to happen sooner than later and the would result in a market melt up, if you will. >> we saw what the threat of europe poses. just a slow economy with mcdonalds and the same-store
restaurant sales held back by europe you like dividend yields and the golden ands, mcd. what makes you attracted to mcdonald's given the exposure in europe and the sell-off. >> the stock down we think it's a great buy in here. that's executing very well and don't forget it's almost an emerging market play not just a developed international play. >> talk to us about the dividend yield because you've called this a once in a generation opportunity for dividend stock investors. what do you mean by that? >> a better than bond yield. buy it yielding 3.2% a half a percentage point better than the mcdonald's ten-year debt. we'd rather be an owner of the stock getting growth of income. >> rather an owner than a lender. you like eaton in the industrial space. etn is the ticker symbol.
it's sold off healthly from the springtime high but a yield well off from what the government paper is yielding. >> 3.7% yield. a company returning cash to the shareholder and increased dividend close to 70% over the past five years. that's a nice raise. look, they're going to be having huge acquisition with cooper industries. it's been a company proven to be a good requirer and intergreater of acquisitions. we think it's an attractive price to come in. >> last january we had you on the program with whirlwool and johnson control and j.p. morgan chase and they've seen price decreases. have you taken them off the table. >> we like j.p. morgan and closer to adding to adding and
in jci we're waiting and exited whirlpool. >> the four you have i assume you own positions in those. >> that's correct. >> our guest hank smith with the haverford trust. >> coming up next week, the housing market may still be shaking, but home renovations are building momentum. i'll have that story. >> tom: also next week, we'll look at small businesses. on monday, we catch up with a couple of entrepreneurs who were starting their miami music school a year ago. we pay them another visit to hear how business is going. whether it's business, investing or the hard-knock world of professional sports, success comes from respect and has to be earned. even though the san antonio spurs were knocked out of the nba playoffs this week. author and educator lou heckler has been thinking about some lessons from the stars. >> "sports illustrated" had an interesting article about tim
duncan, the all-star big man for the san antonio spurs. he is an unconventional talent on the court and off, too. you never read about him in gossip columns, he rarely if ever does commercials, and he'd rather spend his free time with his wife and family. wow, there's an idea. duncan's coach, greg popovich, said, "tim commands respect, because he doesn't demand it. he commands respect, because he doesn't demand it." years ago, i did some training programs for a large agricultural company. part of the curriculum involved a film about power-- position power, information power, and so on. the filmmakers said referent power was by far the most potent form-- power you have that is referred back to you by followers because of the respect they have of you. in our in-your-face society, maybe we could take a cue from tim duncan. he doesn't require anything from us, because his actions make us want to follow his lead. if you find yourself in a position to lead others, do a little self-assessment. am i demanding respect with noisy outbursts and showy
actions or commanding it by my humility and my daily example? i'm lou heckler. >> tom: that's "n.b.r." for friday, june 8. we want to remind you this is the time of year your public television station seeks your support. support that makes programs like "n.b.r." possible. goodnight, everyone. we'll see you online at nbr.com and back here next week. "nightly business report" is brought to you by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org